Storage Purchasing Strategy: Channel Choices

Value-added resellers, systems integrators and even distributors play a big part in your company's success. Choose them with care.

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In telecommunications, "the last mile" refers to the final leg of delivering phone, Internet or television to the customer. The provider brings solutions from a wide, confusing space with multiple purchasing options, and simplifies and installs it for the customer -- for a price.

Value-added resellers (VARs) and systems integrators (SIs) are kind of like your local cable company. These indirect sellers -- a.k.a. the channel -- take a wide array of services and distribute them to end users. While its role might not be sexy, the channel plays a bigger part in what your company buys for storage and other areas of IT than you might realize.

Let's identify and define the different types of channel players, and the roles they play in the "distribution" (pun intended) of vendor storage solutions.

Value-added reseller (VAR). VARs invariably deliver a broad selection of technologies and solutions from different vendors across some selected geography, vertical market, or both. Successful VARs make their money not only by reselling vendor products and solutions, but also by providing services (the added value) for installing, integrating and supporting those technologies.

Systems integrator (SI). System integrators traditionally do not take title to products and play more of a consulting role, making technology recommendations based on the unique needs of their client. SIs can provide a varying and broad range of professional services: assessments, system design, installation, and ongoing services and support to architect and integrate the solutions into a client's IT environment.

Distributor. A traditional distributor of storage solutions purchases the technologies directly from the vendors at discounted prices and then sells them to VARs, SIs and – sometimes -- to very large organizations. Distributors don't usually wrap much in the way of services or support into their offerings because they rarely sell directly to an end-user organization. VARs and SIs will often buy from distributors; most end-user organizations will not.

In the case of VARs and SIs, the lines can get a bit blurry. VARs can look a lot like SIs, and SIs can appear just like traditional VARs. It's most important to understand, though, that the main role of both is to be a trustworthy resource to help solve their clients' specific IT needs as they grow and change over time. As a result they have a huge influence over what gets bought by a significant chunk of the market.

So, why doesn't every company, regardless of size or vertical market, just go and purchase storage and other solutions directly from the EMCs, IBMs, HPs, NetApps, Dells, Hitachis and Oracles of the world, especially if they might get a better price? Essentially, why does IT need the channel? Simply put, large, multi-national vendors don't have the time, support staff or bandwidth to properly treat and satisfy, on an individual basis, each organization using one or some of their solutions.

I say this not to point out a weakness or flaw with the major vendors, but rather to illuminate the kinds of problems that the strong VARs and SIs set out to solve. Take the case of an infrastructure failure; using VARs and SIs gives a business "one throat to choke," so to speak, meaning that there's one place to go for assistance. For companies with small -- or no -- IT staff, having a dedicated, knowledgeable team that understands its IT ecosystem and that is trusted is imperative.

VARs and SIs have completely different business models than vendors and IT end users, so let's see what makes these types of businesses successful -- or not.

As with any business entity, relationships are paramount to success. With channel partners, though, managing the relationships they have with both vendors and clients ultimately determines their profit margins, and consequently, the overall success of the business. It goes without saying that it is in the best interests of VARs and SIs to keep their end-user buyers happy with quality products, competitive prices, and top-notch service. However, what's often overlooked is the importance of the vendor-to-partner relationship -- and there's a lot at play in this marriage. Every major vendor makes significant investments in an effort to have a well-functioning, high-performing and diverse indirect sales program. What does that look like, though?